Paying with a credit card just got more expensive

By Amberlee Lovell , Deseret News

Published: Thursday, Jan. 31 2013 11:25 a.m. MST

Merchants have generally paid “swipe fees” each time a customer used a credit card. Banks and card issuers earned 3 to 4 percent of the transaction price in total and costs were passed on to customers in spread-out ways. But now, credit card users in 40 states may pay the fee directly. (Shutterstock)

Starting this week, it costs to pay with plastic.

Businesses in 40 states, including Utah, can now charge a 4 percent fee on a credit card transaction, according to an article by Consumerism Commentary.

Previously, merchants generally paid “swipe fees” each time a customer used a credit card. Banks and card issuers earned 3 to 4 percent of the transaction price in total.

Those costs were passed on to customers in more spread-out ways, regardless of what payment type was used. But now, credit card users will pay the direct fee.

This nullifies most benefits that come from using a card, considering even cards offering 5 percent cash back only allow it on specific products. Cash could be the best option.

Are cash users really costing a company less, though? Luke Landes, author of the Consumerism Commentary article, said he doesn’t think so.

“The figuring can’t ignore, however, there is a cost to a retail location’s acceptance of cash,” Landes said. “Someone needs to handle the cash, and a responsible employee needs to count it at the end of the day. Someone needs to bring the cash to the bank to deposit it, and the bank surely charges fees for business deposits. Have an armored guard service? You can bet there is a cost associated — a cost no business would have to deal with if all transactions were effected with plastic or electronics."